Making Marketing Decisions- Segmentation, Targeting, Positioning

Question 1

The process of segmentation

Answer 1

• This is the process of identifying different groups of similar needs.
• The different groups of needs and wants are known as market segments.

Question 2

What is demographic segmentation

Answer 2

• Refers to characteristics of the people in the target population.
• Demographic factors may also include what stage in their lives people are at.

Question 3

What is geographic segmentation

Answer 3

• Groups needs and wants based on the geographical area in which the customers are based.
• For example, types of houses required in Iceland and in Nigeria may be very different to each other due to climate conditions.

Question 4

What is income segmentation

Answer 4

• High income earners are more likely to be interested in products to do with saving and investing. Lower income groups are more likely to be interested in borrowing.
• Socioeconomic segments people based on their income and professions. It is very common for the media to categorise their audiences on this basis.

Question 5

What is behavioural segmentation

Answer 5

• Behavioural segmentation focuses on what customers actually do.
• For example, it analyses customers in terms of when they buy, how much they buy, brand loyalty and the benefit they want from the products.

Question 6

The value of segmentation

Answer 6

• Managers can understand what different groups want rather than treat all customers as the same.
• Can enable more focused and efficient marketing.
• Managers will want to balance a desire to meet customer needs with what is practical, efficient and profitable.

Question 7

Influences on choosing the target market

Answer 7

• By selecting target segments the business will be able to focus on needs and wants of the customers more precisely and effectively.
  A business will target segments where it thinks:
• there is sufficient demand and potential profit to justify the investment.
• it has the ability to be competitive and gain sales.

Question 8

Niche marketing

Answer 8

• When a business decides to focus on a specific segment of the market.
• These groups of customers are smaller than the market as a whole but have clearly identifiable needs and wants.
• This allows the business to focus its marketing activities more precisely.

Question 9

Advantages of targeting a niche market

Answer 9

• Less competition.
• Clear focus.
• Builds up specialist skills and knowledge.
• Often charge a higher price.
• Customers tend to be more loyal.

Question 10

Disadvantages of targeting a niche market

Answer 10

• Lack of economies to scale.
• Risk of over dependence on a single product.
• Likely to attract competition if successful.
• Vulnerable to market change.

Question 11

Mass marketing

Answer 11

• This does not try to match the needs of a specific segment precisely; instead it aims to provide products that meet some of the needs of most of the people.
• Aims for volume by developing products that will meet some needs of large numbers in the market.

Question 12

Position + in relation to market mapping

Answer 12

• This means how their products are perceived relative to their competitors.
  Market mapping
• Managers identify two key aspects of the product that customers use to judge the offerings of different businesses.
• Managers can then plot where their business or product sits in relation to their competitors.

Question 13

Influences on the positioning of a product

Answer 13

• The strengths of the business.
• Competitors.
• Market conditions.